Thursday, April 1, 2010

Benefits of Federal Health Insurance Reform

2010's federal health insurance reform includes a wide-ranging panoply of programs, credits and other measures. Folks currently covered by employer sponsored health insurance plans won't experience much immediate change. But over the next year and later, they'll see improvements.

Those having trouble getting coverage will find the new law a big improvement. The recent legislation isn't Internet-friendly--it can't be summarized to two paragraphs or less. But there are a number of provisions that could soon change things for millions of Americans. Here they are, with those taking effect sooner listed first.

Small Business Tax Credit. Small businesses may get a tax credit of as much as 35% of their employee health insurance premiums, depending on how large they are, starting immediately and running through 2013. Small, in this case, means small (as in no more than the equivalent of 25 full-time employees). These companies, which may number as many as 4 million, are perhaps the most likely not to offer health insurance to employees, so the credit could bring more people under the umbrella of employer-sponsored coverage. The credit will increase to 50% of premiums beginning in 2014 and is available for any two consecutive years at the 50% level.

Closing the Medicare D Doughnut Hole. Those covered by Medicare D policies who in 2010 hit the gap in coverage called the "doughnut hole" will be eligible for a $250 rebate. Beginning in 2011, a 50% discount (instead of the rebate) will be available for prescriptions filled in the doughnut hole. The doughnut hole will be closed in 2020.

Federal High Risk Pool. By the end of June, 2010, a federal high risk insurance pool will become available for persons with pre-existing conditions who are having trouble getting coverage otherwise. This pool is temporary, and will operate until federally established health insurance exchanges provide a permanent source of coverage beginning in 2014. At that point, persons with pre-existing conditions can purchase health insurance through the exchanges or some other way, such as individually acquiring coverage. You can more information and application options at

Federal Assistance for Employers Covering Early Retirees. By the end of June 2010, a temporary federal program will begin offering reinsurance to employers providing early retirees (i.e., those between the ages of 55 and 64) with health insurance during retirement. Reinsurance is an indirect way of subsidizing retiree health insurance coverage, and should make it easier for employers to maintain coverage for early retirees. (Retirees 65 and older are eligible for Medicare coverage, so the reinsurance program doesn't extend to them.) The reinsurance program will be superseded in 2014 by the health insurance exchanges.

No More Punishing the Sick. Just as banks are notorious for denying credit to those who need it the most, sometimes insurance companies drop customers because they fall ill. Beginning at the end of September 2010, insurance companies will be prohibited from engaging in this practice. Some Tiny Tims will enjoy Christmas early this year when their Scrooge-like health insurers can no longer ax them.

Children Under 19 Cannot Be Turned Down for Pre-existing Conditions. By the end of September 2010, insurers won't be able to turn down children under 19 because of pre-existing conditions. (By 2014, insurers won't be allowed to turn anyone down for pre-existing conditions.) The high risk pool mentioned above could cover children who aren't protected by this provision.

Young Adult Dependents Up to Age 26 Can Be Covered by Parents. By the end of September 2010, young adults up to age 26 who are dependents of their parents will be eligible for coverage under their parents' policies (unless they live in a state that mandates coverage to an older age, such as 28 or 29).

No Lifetime Caps on Coverage.
By the end of September 2010, insurers won't be allowed to impose lifetime limits on coverage.

Phaseout of Annual Limits on Coverage. By the end of September 2010, insurers will face greater restrictions on their ability to place annual limits on coverage. By 2014, annual limits will be eliminated.

Free Preventive Care. By the end of September 201o, new private insurance plans will have to cover preventive care without co-pays or deductibles. Beginning in 2011, Medicare will provide the same free preventive care coverage.

Increased Funding for Community Health Centers.
Beginning in October 2010, community health centers--clinics that provide primary care to mostly low income patients--will receive increased federal funding in order to almost double over the next five years the number of patients they treat. This should help alleviate the shortage of primary care throughout much of America.

Independent Appeals Process. By the end of September 2010, new health plans will be required to have independent appeals processes for customers denied claims or coverage. This could be very important if you or a family member have a major health issue.

This year's health insurance reform affects many other aspects of the health care system, and will be implemented over the next decade or so. A more permanent system with health insurance exchanges should be in place by 2014. The number of primary care practitioners should increase. The patchwork health insurance system of the past will gradually be phased down, and near universal coverage should result from the federal programs. In the meantime, if you want information about current health insurance resources, take a look at Illegal immigrants cannot participate in the federally sponsored system, and may have to fall back on the remnants of the old health care system. This limitation is understandable from a political standpoint. However, if an illegal immigrant has, for example, tuberculosis, meningitis or some other transmissible illness, we all benefit if that person gets good health care.

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